In the present-day scenario of sky-rocketing rent, it is becoming exceedingly crucial for one and all to own a home. Of course, not only it is a tremendous financial achievement but also offers the much-desired sense of contentment. That said, it may not be possible to save up to lakhs of rupees that are required to buy a home, which is why you ought to take a look at the best home Loan offers provided by banks, non-banking financial companies (NBFCs), and housing finance corporations. Since a Home Loan is a long-term commitment often ranging anywhere between 10 and 30 years, it needs your due diligence. You must analyse every factor that may play a significant role in making this commitment easier and more efficient for you.
One such aspect is having a co-applicant on board while filing your application for a Home Loan. If you happen to be new to this aspect, let us explain it to you in detail. An applicant often obtains a joint Home Loan in conjunction with a spouse, parent or siblings. In India, joint loans are only offered to the spouse or blood relatives of the applicant such as parents or sibling. It is for this reason that friends, live-in partners or distant relatives cannot apply for a joint loan.
As per the regulations, a spouse can be a joint applicant for a Home Loan, without having a share in the ownership of the property, or simply put, without being a co-owner of the property. This is, however, not the case with parents or siblings. They need to be co-owners in order to be co-applicants.
In the case where two or more people share the ownership of the property, most banks insist on offering joint loans.
Now that you are aware of the underlying nuances pertaining to the joint application for a Home Loan, let us move forth to discuss the perks of being a female co-applicant.
If, as a woman, you are the primary applicant for a Home Loan, it is highly likely that your bank will offer you the credit at a discounted interest rate. The decrease in the price can be anywhere between 10 basis points to 50 basis points, and is some rare cases, up to a whopping 75 basis points. This rate differential will prove to be extremely beneficial for you in the long run.
As discussed earlier, if you are taking a joint loan with your husband, it is not mandatory for you to be the co-owner of the property. This saves you from the hassle of increased paperwork during the purchase of the property, while still entitling you to the benefits of the joint loans. That being said, you must keep in mind that this perk won’t apply to you if you are applying for the loan with your brother/sister or son/daughter.
If you are taking a joint mortgage with your husband, you can enjoy an extended tenure of 20 years. The only restriction being the age of retirement of the older of the two applicants. Even in this case, this perk is not available, if you happen to be taking a loan with your brother/sister or son/daughter. In that case, the loan tenure can be a maximum of 10 years, again, subject to the retirement age of the older applicant.
When you file a joint Home Loan application, and all the co-applicants are employed with a steady source of incomes, it enhances your Home Loan Eligibility. For instance, if you earn 80,000, you will be eligible for a credit with an equated monthly instalment (EMI) restricted to 32,000, considering the golden rule of confining your Home Loan EMI to 40% of your monthly income. However, if you have a co-applicant on board, with a salary of 60,000 together you will be eligible for a loan with an EMI of 56,000. This will primarily help you in getting a higher loan amount. Besides, having two applicants for credit will assure the bank that the loan will be paid off by one of the co-applicants, even when the other defaults.
When it comes to tax exemption, both the applicant as well as the co-applicant are entitled to enjoy the perks. As per the Income Tax Act of 1961, a waiver of up to 2 Lakhs is available under the section 24(b) against the interest paid towards the Home Loan in any given year. On the other hand, an exemption of up to 1.5 Lakhs can be availed, against the repayment of the principal amount. In the case of joint application, these exemptions can be enjoyed by both the applicants, in every financial year.
If you are a woman, with co-ownership of a self-occupied house, you are further eligible for an extra deduction of up to 1.5 Lakhs against the interest paid in a year.
We hope that you are now well aware of the numerous benefits of being a female co-applicant for a Home Loan application. All you need to do is before you sign your Home Loan agreement. Make sure to negotiate with the bank for better Home Loan interest rates. In addition, don’t hesitate to seek clarification for any aspect that you may not know or understand explicitly. After all, a Home Loan is one of the most significant financial decisions of your life, and you must take it only when you have the complete know-how of the same.
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